New Delhi: Brothers Malvinder Singh and Shivinder Singh suffered a major setback on Thursday with the Supreme Court refusing to allow them to sell their shares — encumbered as well as unencumbered — held by them in Fortis Healthcare.

In its interim order, a bench led by justice Ranjan Gogoi also declined the plea of lenders including Axis Bank and Yes Bank to sell the shares pledged by the brothers to recover their debt until further orders. The restriction on the brothers from diluting their stake in the hospital chain will continue till October 31, the date fixed by the court for final disposal of the case.

The apex court had on August 11 asked the promoters to maintain status quo with regard to their stake in the hospital chain on the plea of Japanese drug maker Daiichi Sankyo.

Daiichi had moved the court to secure assets of Singh brothers to realise the Rs 2,560-crore arbitration award it won in Singapore last year over its Ranbaxy deal against the brothers. Thursday’s clarification came on an application filed by RHC Holding and Oscar Investments seeking clarity on whether an August 11 order applied to their encumbered shares in Fortis Healthcare as well.

Encumbered assets are those pledged or offered as collateral to a lender. The Singh brothers control RHC and Oscar, which jointly own Fortis Healthcare Holding, the company that holds their stake in the hospital group. RHC Holding has an 80.67% in Fortis Healthcare Holding while Oscar Investment holds the remaining 19.33%.

Fortis Healthcare Holdings in turn has a 52.5% stake in Fortis Healthcare. The two companies had also sought permission to sell their shares in Fortis Healthcare already pledged to lenders on the grounds that they have to pay their loan liability of Rs 468.37 crore by August-end.

Earlier, this month, Daiichi had approached the SC against the Delhi High Court’s June order that cleared the way for the Singh brothers to potentially sell a stake in Fortis Healthcare.

Though the HC’s interim order of June 22 had ensured that the value of unencumbered assets held by the brothers in holding companies should not change, it had said that “corporate transactions cannot be stalled at the behest of a decree holder, Daiichi in this case”.

Daiichi, which is no longer the owner of Ranbaxy after it sold the company to another Indian pharmaceutical major, Sun Pharmaceutical Industries for $3.2 billion in 2014, alleged that the Singh brothers had “wilfully and brazenly” disregarded the HC’s orders to protect its interests.

“The respondents are attempting to frustrate the enforcement of an arbitral award in favour of the applicant (Daiichi) by systematically selling their assets, thereby obstructing the enforcement of the award of April 29, 2016…” the petition stated.

The Japanese company further said that while Fortis Holdings had 52.20% stake in Fortis Healthcare on March 31, 2017, its shareholding decreased by more than 6% to 46.08% on June 22, 2017, the day when it moved the apex court. Citing various disclosures made to BSE, Daiichi said that as on July 20 the Fortis Holdings stake has reduced to 39.71% pursuant to a sale of shares in the open market.

A Singapore tribunal had last year ordered the Singh brothers to pay the Japanese drug maker Rs 2,562 crore in damages for concealing information regarding wrongdoings at Ranbaxy while selling it for $4.6 billion in 2008. The Singh brothers are contesting this arbitration award in the HC. Along with interest and legal fees, the total liability was last pegged at Rs 3,500 crore